U.K. to Ban Fossil-Fuel Cars by 2040 as Automakers Race to Adapt

The U.K. became the latest European country to mark the end of the line for diesel and gasoline fueled cars as automakers such as Volvo race to build electric vehicles or face the consequences of getting left behind.

In London, the government said it will ban sales of the vehicles by 2040, two weeks after France announced a similar plan to reduce air pollution and become a carbon-neutral nation. For the auto industry, the end of an era for fossil-fuel powered cars poses a challenge not everyone is welcoming.

“We could undermine the U.K.’s successful automotive sector if we don’t allow enough time for the industry to adjust,” said Mike Hawes, chief executive officer of the Society of Motor Manufacturers and Traders. “Outright bans risk undermining the current market for new cars and our sector, which supports over 800,000 jobs across the U.K.,” he said. “The industry instead wants a positive approach which gives consumers incentives to purchase these cars,”

Daimler AG, the maker of Mercedes-Benz cars, is keen to shore up diesel, since it powers many of its lucrative sport utility vehicles and big sedans, but others are embracing the new reality. Sweden’s Volvo Car Group said that by 2019 all of its cars will have an electric motor, while BMW AG will build an electric version of its iconic Mini compact car in Britain.

The global shift toward electric vehicles will create upheaval across a number of sectors, from oil majors harmed by reduced gasoline demand to spark plug and fuel injection makers whose products aren’t needed by plug-in cars. In the U.K., the decision is partly brought on by stringent European Union emission rules that the country must follow even as it is set to leave the bloc.

“We can’t carry on with diesel and petrol cars,” Environment Secretary Michael Gove said on BBC Radio 4’s “Today” show. “It’s important we all gear up for a significant change which deals not just with the problems to health caused by emissions but the broader problems caused in terms of accelerating climate change.”

The environmental push comes as the U.K. plans to invest more than 800 million pounds ($1 billion) in driverless and zero-emission technology and outlined plans to invest 246 million pounds in battery technology research. For activists, the new targets are not ambitious enough.

“2040 is far too late,” said Areeba Hamid, a clean-air campaigner at Greenpeace U.K. “Car manufacturers like Volvo have announced their intention to move away from petrol and diesel by the end of this decade. Germany, India, the Netherlands and Norway are all considering bans by 2030 or sooner.”

Critics are also concerned that it will be up to local authorities to impose tough levies on the most polluting diesel vehicles as soon as 2020. The plan is to urge local jurisdictions to reduce emissions first, by fitting diesel vehicles with filters, changing road layouts and removing speed humps.

“What we’re saying to local authorities is: Come up with an imaginative solution to these proposals,”’ Gove told the BBC.

The U.K. has the largest fleet of diesel vehicles in Europe after drivers were encouraged to switch from gasoline because diesel has more range and emits less carbon dioxide. But emissions from the fuel are between eight and 10 times more toxic, according to Stephen Holgate, medical research professor at the University of Southampton and special adviser on air quality at the Royal College of Physicians.

Britain has now switched emphasis and is seeking to position itself as a leader in electric and driverless car technology, hoping to create jobs and export opportunities as it quits the European Union. Today’s decision represents a more ambitious update to last month’s Queen’s Speech, which said the government would set a target for almost every car and van to be zero emission by 2050.

Plug in cars are still only about one percent of all U.K. vehicle sales, yet the country is one of only a handful worldwide to have more than 100,000 plug-in automobiles on the road.

About BloombergNEF

BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
Sign up for our free monthly newsletter →

Want to learn how we help our clients put it all together? Contact us